Booking Holdings - the new name for what was the Priceline Group - showed significant growth across all sectors in 2017, with most key metrics
up around 20%.
The company, which provides travel services in more than 220
countries through its six brands - Booking.com, Priceline.com, Kayak, Agoda.com,
Rentalcars.com and OpenTable - reported revenue of $12.7 billion for the full
year of 2017, up 18% over 2016.
To put that in perspective, that is annual revenue higher
than the GDP of Malta, Brunei or the Bahamas.
The company also reported gross travel bookings during 2017
of $81.2 billion, a 19% increase compared to 2016, and gross profit of $12.4
billion, a 21% increase.
“Booking Holdings finished 2017 with a strong fourth quarter,
reporting year-over-year growth in room nights booked of 17% and adjusted
EBITDA growth of 23%," said Glenn Fogel, CEO of Booking Holdings.
The company’s largest brand, Booking.com, added 470,000
properties in 2017 to end the year with 1.6 million options that are bookable
on its website and mobile app.
During a call with analysts following the release of the
company's full-year results for 2017, Fogel fielded several questions regarding
the alternative accommodations sector offered through Booking.com, which he
said has grown to approximately 1.2 million homes, apartments and other unique
places to stay - a 53% increase over 2016.
The Airbnb questions
Many of the questions alluded to recent updates announced by
competitor Airbnb, such as the creation of Airbnb Plus for listings that pass a
100-point inspect.
“One of the great things about our Booking.com platform is
people already trust us,” Fogel said.
"They know when they come to us, they get that alternative accommodation. They already feel confident that they're getting what is on the page. It is as described, and they're going to get it. And if it goes wrong, that we have that backup with that 24/7 customer service in 43 languages that we'll fix it for them."
Fogel also emphasized additional differentiating features,
such as the fact Booking.com displays both alternative and traditional
accommodations in one result and that can be instantly reserved and confirmed.
“They see both right there, they see the reviews right there
and it’s instantly bookable. That's a big thing for a lot of customers. I’ve done it myself with some other services where
you go back and forth, back and forth emailing and then you find out the person
doesn’t really want to rent to you. It’s a horrible experience.”
And regarding pricing: “We do not charge the travelers fees. I think that's also an annoying thing for a customer, you go through, you think the price is one thing, then all of a sudden there's this big service fee. That, also, to me is not the proper way to go. So I believe we have a superior offering."
Analysts also asked how Fogel views Airbnb’s announcement to
partner with SiteMinder to list its hotels on the site.
“I don’t see that one company saying they’ll offer a certain number or a small
number of select hotel-type properties as a big issue,” he said. Fogel said the focus is on customer service and “not as much that someone else is going to hook up to a channel
manager and have 10,000 or whatever boutique hotels.”
Looking ahead, Fogel said Booking Holdings will “aggressively expand”
the supply of alternative accommodations available on Booking.com while also
“investing in tools to help our supply partners more efficiently onboard their
properties and more efficiently manage their participation in our marketplace.”
The company is also “experimenting with providing
in-destination experiences” with tests currently running in multiple markets,
according to Fogel, all with a goal of making the Booking.com mobile app the
center of a traveler’s experience.
Marketing efforts
Advertising spending jumped substantially in 2017.
The company spent $4.1 billion on performance advertising
(assumed to be primarily on Google), a 19% increase over 2016. Brand advertising, while a smaller part of the ad budget at $392 million, saw a larger increase, up
nearly a third compared to 2016.
“Brand marketing remains an important investment as we seek
to not only increase our share of direct traffic but also to enhance our
effectiveness in the pay channels,” Fogel said.
“We plan to continue to experiment with the right mix of
marketing spend and geographic focus to achieve our long-term goals.”
Fogel cited Amazon as a company that has created such as
strong brand that people go directly to the site. “That's a great thing for us to aspire to be able to do. I don't know if we'd ever get there or not, but I certainly know that the way to try and get there is always providing a better service, the best selection, most breadth, the best prices, great customer service, getting rid of the friction and then God forbid, anything goes wrong, anything goes wrong, you fix it. And those people then become loyal for life."
When asked about Google’s continued push “down the funnel”
in hotel search and booking, Fogel sounded optimistic. “We have a very good
relationship with them. It’s been very symbiotic. And it’s not only with Google, but it’s also with our hotel partners - being able to provide customers to them in a more
efficient way and in a less costly way to them than it would be if they tried to
participate on their own in Google.
“We know Google is going to continue to innovate new things, and we're going to have to continue to adapt to it. I am confident because we’ve been successful
in the past that we will continue to be successful in the future.”
Future growth
“We do believe China is the locomotive of travel growth for
some time to come,” Fogel said.
He said the company has a significant presence in China for
both Booking.com and Agoda and they will look to expand offerings targeted both
to Chinese citizens traveling outside the country and visitors coming to China.
“Big market, big opportunities, and we are spending money and
investing there.”
* Check this interview with Fogel at The Phocuswright Conference 2017...
Executive Interview: Glenn Fogel
One-to-one with Booking.com's Olivier Gremillon
Executive interview with the new vice president of the Home Division at Booking.com -
Phocuswright Europe 2018.